A project to build a high-speed railway in Thailand based on Japan's shinkansen technology has taken an unexpected turn, with the Southeast Asian country considering a significant downgrade to cut costs.

Not so fast

"The 670km Thai-Japanese high-speed train project stretching from Bangkok to Chiang Mai is to have its maximum speed lowered to reduce the overall cost of the project," the English-language Bangkok Post wrote Dec. 27.

Prime Minister Prayuth Chan-ocha, who leads the country's junta, instructed transport officials to consider reducing the top speed from 300kph to between 180kph and 200kph. The development came less than two weeks after a report by Japan calculated the project's cost at 420 billion baht ($13.1 billion), a sum Bangkok deems too high.

Thailand's response surprised Japan, which has spent three years working with Thai officials and engineers to introduce the shinkansen, an achievement that would aid Japan's desire to export the high-speed technology around the world. Reducing the train's speed could sap Japan's enthusiasm since the rail no longer would be a cutting-edge project.

A slower train likely would reduce some expenses, such as for building sound barriers, but laying 670km of new rails would cost nearly the same for either a high-speed or medium-speed line. Slower trains also would probably hurt profitability, as some potential customers may choose to fly.

From firsthand experience operating bullet trains since the 1960s, Japan knows that the likelihood of shinkansen losing customers to airplanes rises once travel exceeds three hours. Even at 300kph, the trip from Bangkok to the northern city of Chiang Mai would take nearly three and a half hours. Potential riders may choose low-cost flights if travel time on the train is lengthened.

The Thai government proposed a fare of only around 1,200 baht for riding the entire line -- less than one-third the price to travel an equivalent distance by shinkansen in Japan. This is low taking into consideration the differing living costs in the two countries.

Japan submitted a business plan and report based on this fare, but limited revenue could easily drive the project into the red. Reducing the train's speed to cut costs thus could prove a death sentence for the project.

The government will not reduce the maximum speed of the 670km Thai-Japanese high-speed train project stretching from Bangkok to Chiang Mai, says Deputy Prime Minister Somkid Jatusripitak.

Mr Somkid said the government has so far made no decision to cut the speed of the project despite earlier proposals advocating the move to save on construction costs.

An initial study found that although lowering the maximum speed would reduce costs slightly it would end up doing more harm than good, he said.

As a result, the project should go ahead as originally planned, he added.

Previously, Mr Somkid said Prime Minister Prayut Chan-o-cha had instructed the Transport Ministry to study the possibility of curbing the maximum speed to 180-200kph after a Japanese feasibility study suggested the original goal of 300kph would require a budget of 420 billion baht.

Fares are expected to be just over 1,000 baht per trip, according to the study.

The deputy prime minister also gave approval to the loss-ridden State Railway of Thailand's (SRT) proposal to increase train fares to help cover operational costs.

Speaking after delivering policy guidelines to the SRT's management, Mr Somkid said he gave the rail agency the green light to raise fares on the condition that it would offer better services.

According to Mr Somkid, he instructed the SRT executives to study the fare hike in detail, including when it should be implemented and how much the rise should be as train fares have remained unchanged for years.

The fare increase is likely to happen after the opening of the next phase of double-track railway development and the purchase of new carriages, said the deputy prime minister.

Mr Somkid also pledged to help the SRT in its reform plan by amending a previous cabinet instruction to allow the state agency to recruit 5,000 new staff to accommodate the double-track railway development project.

Of 5,000 new recruits, 2,000 would be for the first phase and the rest for the second. Currently the SRT has about 14,000 employees who are in charge of train operations and track repair and maintenance.

The SRT is not allowed to recruit new staff due to a cabinet resolution passed in 1998 to reduce the agency's costs.

According to Mr Somkid, the State Enterprises Policy Commission, or superboard, chaired by Gen Prayut will meet this month to discuss measures to help the SRT including amending the 1998 cabinet resolution.

Last month, Deputy Transport Minister Pailin Chuchottaworn said the ministry would not approve the train fare hike until the construction of the first phase of double-track railway development project was completed.